Houston executives raked in $369.4M, enjoyed perks

Twenty-one of the 25 highest-paid executives at public companies work in energy, which comes as no surprise to Houston executive compensation expert Brent Longnecker.

“With the commodity rising to $80, $90 and $100 per barrel, the companies made good money,” he said. “The companies continued to add to their capital expenditures, drill more and produce more. It’s kind of a cool cycle.”

In total, the 25 executives earned $369.4 million in 2010, up 35.5 percent from $272.6 million in 2009.

Anadarko Petroleum Corp. Chairman and CEO James Hackett claimed the top spot for the second consecutive year, earning $24.3 million in 2010, down from $27.5 million the year prior. Last year, Hackett’s salary stayed the same, but he took fewer stock options and less non-equity incentive- plan compensation than in 2009.

“They are always doing deals together and sharing their best practices,” he said. “They are very self-conscious on who the outliers are, probably more than any other industry.”

Meanwhile, the biggest mover on the list was G. Steven Farris, chairman and CEO of Apache Corp., who moved up 23 spots to No. 2 this year. His total compensation jumped to $19.3 million from $7.7 million the year prior due to a significant increase in stock and option awards from 2009.

In addition to Hackett, three other executives on the list went down in total compensation: Anadarko executives Charles Meloy, senior vice president of worldwide operations, and R.A. Walker, president and COO; and Robert L. Moody Sr., chairman of the board and CEO at Galveston-based American National Insurance Co.

New executives breaking onto the list this year — from outside the energy sector — include Kenneth Spitler, former vice chairman, president and COO of Sysco Corp.; and John Molbeck Jr., president and CEO of HCC Insurance Holdings Inc.

Overall, corporate America saw a significant increase in incentive pay in 2010, said David Wise, senior principal in the executive compensation practice in Hay Group’s New York office.

Base salaries remained flat for the most part, while bonuses grew 20 percent and total compensation jumped around 11 percent, said Wise, who works with The Wall Street Journal on an annual list of compensation at the 350 largest U.S. companies.

In the most recent study, compensation increases were due to strong performance years, which is how some executives show higher numbers in the stock and option awards.

“It turns out the average company paid more because generally they performed better,” Wise said.

Other trends in 2010 compensation included more performance-vested equity plans that aren’t worth anything if the company doesn’t perform well, he said.

“Everyone looks at pay and wonders if it will be aligned with performance,” Wise said. “Equity is usually the biggest piece, so that has become important to shareholders.”

Wise’s study found that shareholders think executives should continue to have perks like country club memberships, cars, tax planning and home security paid for by the company.

That was the case for Houston’s top five executives, who all received more than last year in the “all other compensation” column with the exception of Moody.

Use of the company’s personal aircraft was part of the perks for Hackett, G. Stephen Farris of Apache Corp. and J.J. Mulva of ConocoPhillips, according to company filings.

In fact, the Apache board of directors in 2010 required Farris use the company’s airplane for all air travel. And part of Mulva’s perks included tax reimbursement for personal use of the aircraft if he brought his family along on trips.

Meanwhile, Moody received an annual holiday bonus and money for medical care, while most of Schlumberger Ltd.’s CEO’s compensation included health and savings plans along with profit sharing.